Taking it, then, as established that a sum exceeding £2000 was raised each year in Upper Canada as profit from its post office, and that this sum was applied, not for the benefit of Upper Canada, but for the purposes of the public service in Great Britain, the committee next turned its attention to the laws bearing on the situation.
There was an act passed in 1778[199] in the hope of staying the rising rebellion in the American colonies entitled "an act for removing all doubts and apprehensions concerning taxation by the parliament of Great Britain in any of the colonies and plantations in North America and the West Indies." It declared that the king and parliament would not impose any duty, tax or assessment whatever, payable in any of the colonies in North America or the West Indies, except any such duties as it might be expedient to impose for the regulation of commerce.
But although the collection of such duties should be made by officials of the British government, it was not intended that the proceeds should go into the British treasury; for it was provided that the net produce from them should be paid over to the colony in which they were levied, to form part of the general revenue of such colony. This seems sufficiently explicit, but that there might be no doubt as to the applicability of the provisions of this act to the provinces of Canada, they were expressly incorporated in the constitutional act of 1791, which was the charter under which the provinces of Upper and Lower Canada were established.
As in the act of 1778, there was reserved to the British parliament, in the general interest of the empire, the power to make laws for the regulation of commerce, but there was also the same stipulation that the proceeds from such laws should be applied to the use of the province in which the taxes were levied, and in any manner the legislature of the province might think fit.
Applying the acts of 1778 and 1791 to the circumstances of the case in hand, the committee were of opinion that the collection of postage could not be regarded as a regulation of commerce, and as such within the scope of imperial legislation.
But even if it should appear that they were wrong in this opinion, and that the British government had the power to set up a post office in Upper Canada with the exclusive right to carry letters within the province, there was one thing the British government could not properly do. While the constitutional act of 1791 remained unrepealed, the British government could not take the net produce from the post office in Upper Canada, and use it as part of the general revenue of Great Britain.
Having satisfied themselves that, however strong the grounds might be on which the postmaster general of England had proceeded in establishing a post office in Canada, they could not prevail against the acts which have been considered, the committee next gave their attention to inquiring what those grounds might be, and how far they would bear out the pretensions of the postmaster general.
The two acts, which it seemed to the committee the postmaster general would most likely depend upon, were the acts of 1710 and of 1801. The act of 1710, which was the charter for the post office in British America, was dismissed from consideration as not even by its own provisions applying to the colony of Canada, and as annulled so far as concerned any of the colonies by the act of 1778, and as regards Canada by the constitutional act of 1791.
The second of the two acts—that of 1801—repealed all the rates of postage enacted by the act of 1710, and fixed new rates for Great Britain, but made no mention of new colonial rates. Hence, since 1801, there had been no colonial postage rates having the sanction of law, and the committee concluded that the colonies were designedly omitted, when the rates for Great Britain were fixed by the act of 1801, for the reason that the act of 1778 supervened, which made it illegal for the British parliament to impose a tax on a colony for the financial benefit of Great Britain.
The committee admitted that it was a matter for argument whether the unrepealed parts of the act of 1710 might not be held applicable to Canada, but conceding the whole argument on this point, the utmost power remaining in the act was to authorize the establishment of a postal system in Canada. All power to fix the postal charges was taken away by the act of 1801.